• Shares 10 approaches executed to achieve the financial inclusion

Amunugama addresses Indian Economic Summit

The nation’s success story of the past decade came under a fresh spotlight last week when the Central Bank (CB) Chief outlined Sri Lanka’s approaches towards financial inclusion at the World Economic Forum – India Economic Summit. Featured as a panellist for a session titled ‘Inclusive Finance: From Paper to Action’ at the forum that took place from 4 to 6 November, CB Governor Ajith Nivard Cabraal shared a list of 10 approaches that were executed to achieve the financial inclusion the nation enjoys today. With one of the key priorities spelt out in the ‘Mahinda Chinthana’ being that the nation has 100% electricity coverage, Cabraal first pointed out that currently 99% of the country has access to electricity 24 hours a day, a 27% increase from the coverage made available in 2005. Secondly, he noted that while the Government greatly focused on infrastructure development, along with developing new expressways, improving national roads and upgrading all provincial roads, the development of the rural road network was also given equal emphasis. Speaking on the support given to the agriculture sector, he shared that the Government assisted cultivation efforts where many rural people were involved. “We achieved this by improving minor irrigation systems and by dredging a large proportion of the 30,000 tanks dotted across the 14,000 villages of the country,” said the Governor at the panel discussion, which also featured Vice President of Ghana Kwesi Amissah-Arthur, Deshi Foundation, India Vijay Sinha, HSBC India Chief Executive Officer Stuart Milne as speakers and Thomson Reuters, India, Bureau Chief, South Asia John Chalmers. The fourth approach he said was the directive issued to all banks and finance companies to open branches outside the Western Province to provide banking and finance services to the lagging provinces. He elaborated that commencing from 2007, for every branch that was to be opened in the Western Province, two had to be opened in other provinces. Furthermore, Cabraal stated that all banks were directed to operate at least one SME centre in every province, for which the objective was to provide education and training to entrepreneurs to improve their skills in the fields of management, HR, financing, marketing, IT and other key areas. The sixth approach highlighted was substantially improving mobile payment technology, enabling all persons to access the mobile payment system so as to carry out their day-to-day transactions. With the seventh approach being greater emphasis on human resource development, Cabraal said: “A massive effort was made to improve skills development, particularly in tradesmen activities whereby success in certification courses led to the granting of collateral free loans to those persons who qualified in the different trades.” In an attempt to increase access to finance, he noted that group loans were encouraged in several lagging regions so that banks could provide such loans on the basis of the group guaranteeing the loans granted to each other. “A large number of forward sales contracts were facilitated by the Government in order to encourage farmers to have a reasonable pricing structure for their products. In addition, generous minimum prices for paddy and milk were set so as to encourage economic activity in those fields as a result of the reasonable profit margins,” he shared. Lastly, he pointed out that through an innovative scheme titled ‘Divi Neguma’, all persons were encouraged to undertake a second economic activity by way of horticulture, arts and craft, IT, sports, small trades, education, tourism related activity or transport related activity. “This scheme also encouraged a large number of persons to earn extra income thereby enabling their livelihood and lifestyles to improve considerably,” he said.